Discovering Happiness Within Economics

Day 4: “The Economics of Happiness”

Happiness

There are may interesting and varied roles and paths that a young economist can choose from which may lead them in any one direction. Nevertheless any path taken will entail understanding and getting your head around, Demand, Supply, Inflation, taxation and Trade. Wherever you are in your economic journey we all need to understand these concepts as they are vital to prospering in the subject. However, economists also measure “Happiness." I’m sure that the need to measure happiness isn't the first thing most people link to economics but its true!

Finland !

Why is it that Finland and most of the Nordic countries ranked as some of the worlds happiest countries. Finland has consistently topped the world happiness report index and in 2020 it came first, now for the third time in a row. Denmark is also up there as it came second in 2019 and has won in both 2013 and 2016. Now it’s no simple task measuring happiness as it doesn't simply mean how many times you laugh of smile a day. The more accurate way of describing how happy a country is by how its population feels about daily life and a whether they have an all round good balance of life and are satisfied with their existence. Despite this there is also the true fact that richer countries are generally happier and so are richer people, however with money we see diminishing marginal return. So in the case of Finland we can take three major lessons.

First of all

In Finland the gender equality gap is far smaller than most other countries. This has positive effects for both men and women and especially for women who benefit more form policies that promote equality. Finland also has provided new fathers with a nine week paternity leave at 70% of their total salary. On top of this Finland id the only country in the world where fathers spend more time per day with their children than do mothers.

Secondly

Finland has embraced the idea that there is a obviously correlation between feeling happy and how much you earn more however that only is true to a certain amount of income. For people who earn $75,000 or more, they do not experience a large increase in happiness if they earn far more than this figure but statistically are twice as likely to experience extreme happiness than people who earn $20,000 and bellow a year. We all accept that if you are worried about what you and your children are going to eat it can cause daily stresses and lowers quality of life. Finland has overcome this as their poverty rate is one of the lowest in the world and is more than half that of the rate of the US of A. Finland has achieved greater happiness levels as they have a very secure social safety net. Throughout Finland they have adopted programs and policies to reduce poverty and this in turn increases the happiness levels as additional income reduces the stress felt day to day by people with not enough money.

Finally

The Finns have been able to prioritize time over money. The most common belief is that more money = more happiness. We have been shown by Finland that after basic needs are met and you are in a finantualy stable position what matters in terms of being happy is how we spend our time and how we choose to live our lives. The large benefits of prioritizing time over money is seen to have positive affects and can be seen across other cultures and countries other than Finland.

The above information was mostly collated from one source, so I have added the link bellow so that if you wish you can read the report in full.

Why Are the Finns So Happy?

Measuring Happiness

So how is happiness measured? As seen above in the image it shows Finland as being the happiest country in the world. As shown in the image with six main colours. The amount of happiness is primarily measured off of six categories:

GDP per capita

Healthy life expectancy

Freedom to make life choices

Social support

Generosity

Absence of corruption

Bhutan

This way of ranking happiness which was started in 2012 was inspired by the Himalayan country of Bhutan. This country invented or at the very least were the first country to attempt to measure “Gross National Happiness.”

World Happiness Report

The “World Happiness Report” is seen as the United Nations most prestigious index. It is published annually by the “United Nations Sustainable Development Solution Network.” It consists of article and a ranked leader board of nations happiness based on respondent rating. The leader board is also correlated with several life factors such as GDP per capita and social support etc.

The top three Countries in the 2020 report were, 1. Finland, 2. Denmark and 3. Switzerland. The United Kingdom comes in on the chart at 13. Where as the US of A comes in on the chart at 18. Personally I am not totally surprised to see that the United Kingdom is at position 13 as there is a large focus on earning enough money and reducing costs for people with less income . I also am not surprised to see it higher on the chart as in the UK there is little to no public awareness on putting more of our effort into time and how we use time in our day to day lives instead of putting more effort into earning more money. I an slightly surprises to see the UK at position 13 as I would expect it to bee further down at position 20 due to the lack of social support are string communities like a country such as Finland. On the opposite side of the scale the bottom three Countries in the 2020 report were, 1. South Sudan, 2. Central African Republic and 3. Afghanistan.

This above information was collated from one single source, so I have added the link to the sight of origin. You can then watch the full video in your own time if you wish.

Link to YouTube video

The Importance of Happiness

I personally believe, from the point of view of a very happy and content person, that it is both important from a social point of view and an economical perspective to rate and measure Happiness. This is because the affect of peoples happiness being high or low has a direct affect to their lives economically and visa versa. For example if someone is doing economically poorly then their happiness will be low and if another person is feeling unhappy they will for the most part perform poorly economicaly.

The End of day 4. This is a very interesting branch of the economic world. I hope that you found this blog as interesting as I did and I would like you to think about how you can make your life better and happier in one way. Day 5 will be called, “The Story of a Names.”

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